The founders of Snapdeal and investors are divided over the choices available before them. Though, Flipkart has sent a revised offer, Snapdeal is worried about the terms and clauses in the proposal.
“All have their own preferences. Now they will have to sit down and arrive at a decision,” sources privy to the development said. The investors and the founders have been meeting and discussing the options before them. Softbank has been pushing the Flipkart merger deal and it had brought the founders and minority investors on the same page after much efforts.
But some of the clauses in the Flipkart offer are worrisome for the company. “The Flipkart offer is slightly complex. The clauses in the offer letter seek more responsibility from the part of outgoing investors even after the deal is done. This is more complex compared to a normal sale deal. The board will have to find solution to this,” sources said.
Usually the responsibility of the founders and investors ends at the time of the sale. The clauses were there even in the initial offer sent by Flipkart. Flipkart has only revised the value in the new offer to $900 - $950 million. Softbank plans to pump in more money into the merged entity and have a significant stake in the largest e-commerce entity in the country.
But the founders find the Infibeam’s all-stock deal better than that of Flipkart. Infibeam has a large B2B business and a smaller presence in B2C e-commerce. A deal with Snapdeal can help Infibeam strengthen its B2C business and offer a role for the founders.
However, it is not clear whether Softbank would like to pump in more money into Infibeam as it is a listed entity. Meanwhile, Snapdeal is going ahead with the preparation of its PlanB. There is a separate team that is working on the new business plan and the work has not stopped even after the new offer from Flipkart.
According to sources, Snapdeal might shed more flab, streamline operations and opt for a business model that does not require cash like that it burns in the current model. The new model will help Snapdeal remain a standalone entity and sail through with the money coming in from the sale of logistics arm Vulcan Express and Freecharge.